Samsung Electronics Co Ltd (KRX:005930) expected to deliver a profit that is above the expectations of Wall Street analysts for the third quarter of 2015. It would be the first time for the South Korean electronics giant to achieve a profit in two years due to strong sales of chips and displays.
Samsung Electronics 3Q earnings guidance
Based on its third quarter earnings guidance, Samsung estimated its consolidated operating profit to be approximately 7.3 trillion won for the three months ended September.
Wall Street analysts expected the South Korean electronics giant to achieve a profit of around $6.7 trillion won based on data compiled by Thomson Reuters SmartEstimate.
The company estimated its consolidated sales to be around 51 trillion won, compared with the 50.6 trillion won consensus estimate.
Some analysts believe that Samsung benefited from the weaker won, which helped increased the company’s revenue component and offset the impact of price cuts on its Galaxy smartphones.
Lee Jae Yun, an analyst at Yuanta Securities Korea, said, “Component prices are also on a downturn, but weaker Korean won is surely giving a big help on Samsung’s chip and display units. Samsung is increasing the adoption of its premium panels to lower-end smartphones and is also increasing external sales, which looks like a good signal.”
On the other hand, Yoo Eui-hyung, an analyst at Dongbu Securities estimated that the weaker Korean currency contributed around 300 billion won to Samsung’s operating profit. He also suggested that cost-cutting and improved smartphone inventory management also helped.
Samsung can withstand weakness in mobile business
Meanwhile, IBK Securities analyst Lee Seung-woo commented, “There were worries that overall earnings will continue falling as mobile profits declined, but now the numbers make the case that Samsung has the capacity to withstand weakness from the mobile business.”
Samsung’s operating profit from mobile devices is expected to increase by 24% to 2.2 trillion won and sales to be around 27 trillion won, according to the median estimate of six analysts polled by Bloomberg.
“The below-$200 devices largely contributed to the overall smartphone shipment increase in the third quarter.S6 shipments have dropped significantly,” said Lee Seung-woo.
The stock price of the company climbed more than 7% to 1,236,000 won around 1:35 PM in South Korea on Wednesday, October 7.
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